John A. Tures
This commentary is written by John A. Tures, a professor of political science at LaGrange College.
This week, First Republic Bank was shuttered by regulators and bought out by JP Morgan Chase. Though the financial news website MarketWatch says such a purchase should calm the market, a wider banking crisis remains a threat. The federal government should reestablish those banking rules abandoned during the Trump Administration before the banking environment begins to resemble the days just before the Great Recession of 2008.
When Silicon Valley Bank went under earlier this year, former President Donald Trump tweeted “With what is happening to our economy, and with the proposals being made on the LARGEST AND DUMBEST TAX INCREASE IN THE HISTORY OF THE USA, TIMES FIVE, JOE BIDEN WILL GO DOWN AS THE HERBERT HOOVER OF THE MODRRN [sic] AGE.”
Not to be outdone, Trump’s rival, Florida Gov. Ron DeSantis, decided something else was to blame. It would turn out to be his usual go-to source for anything wrong with America. “This bank, they’re so concerned with DEA and politics and all kinds of stuff, I think that really diverted from them focusing on their core mission,” DeSantis told Maria Bartiromo on “Sunday Morning Futures.”
It’s likely he meant DEI (Diversity Equity Inclusion), and he was just as fuzzy about that as he was about whether any of his own state’s banks were in trouble.
Surely some will snicker at their gaffes, but this is no laughing matter. It’s also no more President Joe Biden’s fault for this than it was FDR to blame for the 1929 stock market collapse.
As Newsweek and The New York Times pointed out that in 2018, “Trump signed a bill that axed regulatory requirements for regional banks with less than $250 billion in assets. Under the new rules, such institutions no longer had to submit to “stress testing” by the Federal Reserve and were no longer required to keep a certain amount of cash on hand to protect against the effects of financial shocks.”
What’s more is that one of the biggest cheerleaders of this regulatory rollback of banking reforms passed during the Obama Administration to clean up the Great Recession mess was the Silicon Valley Bank CEO. It seems that the same source showed that SVB hadn’t insured 90% of its deposits.
That looks a lot more like a smoking gun than DEA or DEI. Looks like it’s a DJT policy. A second bank has failed after SVB, and now First Republic is the third.
It’s worth noting that JP Morgan Chase also bought out Washington Mutual and Bear Stearns in 2008, a harbinger of bad things to come that year.
Contact your members of the House and Senate so they can put back the 2009-2010 era bank reforms that prevented such bank failures and sooner, rather than later, if they’d like to stop what could be a series of some of the biggest bank failures in the modern era.
Contact Tures at [email protected] or via Twitter @JohnTures2.
